WATCH: Illinois decoupling law recaptures taxes federal code cuts

By Greg Bishop | The Center Square
The Center Square

(The Center Square) – Gov. J.B. Pritzker says Illinois decoupling from portions of the federal tax code was necessary to keep tax dollars flowing to the state that the federal government was trying to give back.

Signed with slew of other measures last week, Pritzker enacted Senate Bill 1911. The governor’s office said the measure decouples from federal bonus depreciation for newly constructed non-residential real property, among other corporate tax changes.

After announcing grants to address homelessness in Springfield on Monday, Pritzker said Illinois would be hurt if that money was not in state government coffers.

“The decoupling is an effort to try and hold back the onslaught from the federal government to make sure that we can support programs like the one we’re announcing today,” Pritzker said. “So that’s what the purpose is.”

As part of the federal tax changes President Donald Trump approved earlier this year is 100% bonus depreciation, allowing expenses for new construction to immediately be deducted from federal income taxes.

“The bonus depreciation provision … by decoupling from that provision, we were able to recapture approximately $144 million,” state Sen. Elgie Sims, D-Chicago, said on the Senate floor before passing SB 1911. “And also, when you make the change from [Global Intangible Low-Taxed Income] to the [Net Controlled foreign Corporation Tested Income], you’re able to garner another $90 million.”

State spending of public money since Pritzker took office in 2019 has increased $16 billion annually, or nearly 43%.

Before the measure passed early Halloween morning, Senate Minority Leader John Curran, R-Downers Grove, said they know neighboring states are conforming with the federal tax changes, allowing businesses to keep more of their money.

“Neighboring states are offering this and we are not,” Curran said. “We are going to be less competitive yet again in attracting that investment.”

State Rep. Amy Elik, R-Alton, said while she supported some elements, like extending the State and Local Tax Deduction, she said decoupling from the federal tax code complicates things.

“And when the federal government tries to, you know, add rocket fuel to manufacturing and other industries, we shouldn’t have to be the outlier,” Elik said on the House floor in October.

Another element of the bill expands the Illinois Film Production Tax Credit. That move was supported by the Illinois Production Alliance.

“SB 1911 strengthens an already successful program, one that supports thousands of high-quality jobs, drives economic growth across the state, and reflects Governor Pritzker’s strong and consistent support for the film, television, and commercial production industries,” Illinois Production Alliance President Anthony Barracca said in a statement.